Chile’s central bank surprises markets with ‘out of the blue’ rate cut

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The Central Bank of Chile

The Central Bank of Chile surprised markets on June 7 by cutting the policy rate by 50 basis points to 2.5% on lower growth and commodity prices.

Rate-setters think “the economy has not recovered enough to close the activity gap and boost inflation”. Therefore, the board unanimously “deemed [it] necessary to recalibrate the monetary impulse”, said the policy statement.

The move surprised markets and analysts, as it sharply interrupted the policy normalisation started by the central bank in

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